eBay rejected GameStop’s unsolicited $56 billion takeover bid, calling it “neither credible nor attractive,” according to a letter from eBay Chairman Paul Pressler, seen by Bloomberg. This reaction could trigger an attempt by GameStop to take the offer directly to eBay shareholders or to replace eBay’s board with one favorable to its offer via a proxy fight.
Last week, Gamestop offered $125 per share to buy eBay, despite a market value less than a quarter of eBay’s ($11 billion versus $45 billion). The offer, half cash and half GameStop stock, represents a 20% premium to eBay’s current stock price. GameStop plans to borrow $20 billion to help finance the acquisition, but, when asked, CEO Ryan Cohen could not explain in detail where he would find the additional capital needed.
eBay said it reviewed the offer thoroughly and expressed concerns about financing and debt related to the transaction. In his letter, Pressler said eBay was in a strong position, having undergone a turnaround to better compete with rivals like Amazon and “consistently returning capital to shareholders.”
GameStop CEO Ryan Cohen could receive $35 billion in stock if he meets certain criteria, including increasing GameStop’s market value to $100 billion, according to a report released last week by The Wall Street Journal. The eBay acquisition could also be part of Cohen’s plans to grow GameStop beyond its reputation as a video game and collectibles retailer.
GameStop was one of the original “meme stocks” and became infamous for a short squeeze that caused its stock value to skyrocket and fluctuate wildly in early 2021. The company has recently pivoted from NFTs to retro games, spanning classic systems from the NES to the PS Vita. However, it closed more than 400 stores in the United States earlier this year in an effort to cut costs and increase its market capitalization.
eBay, meanwhile, has 136 million users who spend $80 billion annually on the platform. Last year, the online marketplace generated $11.6 billion in revenue from commissions, advertising and money processing payments.